Alarmist Consensus: Oil Crisis Just Ahead (1996 example for today)

Given that the most recent war America fought was in the Persian Gulf, let’s start by examining the likelihood that an oil crisis will occur in the coming decade. Forecasting is always risky, especially where oil is concerned, but consider what a variety of experienced energy hands from every point on the political spectrum have said in the past year alone. Donald Hodel, who was a Secretary of Energy under Ronald Reagan, has said that we are “sleepwalking into a disaster,” and predicts a major oil crisis within a few years. Irwin Stelzer, of the American Enterprise Institute, says that the next oil shock “will make those of the 1970s seem trivial by comparison.” Daniel Yergin says, “People seem to have forgotten that oil prices, like those of all commodities, are cyclical and will go up again.” James Schlesinger, who was the Secretary of Energy under Jimmy Carter, has said, “By the end of this decade we are likely to see substantial price increases.” In March of last year Robert Dole, the Senate majority leader, said in a speech at the Nixon Center for Peace and Freedom, “The second inescapable reality of the post-twentieth-century world is that the security of the world’s oil and gas supplies will remain a vital national interest of the United States and of the other industrial powers. The Persian Gulf . . . is still a region of many uncertainties. . . . In this ‘new energy order’ many of the most important geopolitical decisions–ones on which a nation’s sovereignty can depend–will deal with the location and routes for oil and gas pipelines. In response, our strategy, our diplomacy, and our forward military presence need readjusting.” The chairman of the Federal Reserve, Alan Greenspan, not known for being an alarmist, in testimony before Congress last July raised concerns that a rising trade deficit in oil “tends to create questions about the security of our oil resources.”

Concerns about a coming oil crisis have surfaced in the financial markets as well. Last October, in an article titled “Your Last Big Play in Oil,” magazine listed several billionaires and “big mutual fund managers” who were betting heavily that oil prices would rise significantly. The magazine went on to suggest an investment portfolio of “companies that are best positioned to profit from the coming boom.”